Comprehensive programme featuring
numerous new exercises and case studies!
Back Office
Management And
Operations
Enhance Operational Processes
And Operational Risk
Management
15 – 19 February 2009
Villa Rotana Hotel
Dubai, UAE
Who Should Attend?
 
Delegates attending this course should
have a basic understanding of back
office management and operations. From
Back Office Managers and Operations
Managers to Middle Office Managers and
Treasury Managers, this course is for
managers that want to learn best
practice in operational risk management,
with a special focus on back office
management and operations!
Organised By:
Tel: 971-4-3352437 Fax: 971-4-3352438 Email: register@iirme.com Web: www.iirme.com/backoffice
By attending this cutting edge course you will:
• Learn best practice in operational risk management, with a special focus on
back office management and operations
• Receive an overview of issues and effective solutions in managing back office
staff, transaction volume, new products and third party suppliers
• Become familiar with traditional and recent developments in operational and
operations risk management and regulatory procedures applied in a typical
back office environment with their associated control, compliance and risk
management policies
• Identify areas where productivity can first be measured and then provide a
workflow roadmap for improving control and monitoring functions
• Learn how back office operations can improve the treasury performance and
internal funds transfer pricing system in the ALM function
• Explore the role of back office management in increasing the effectiveness
and profitability of clearing, settlement, custodial, trading, treasury and ALM
processes
• Understand the role of managing corporate actions, asset servicing, client
services and customer relationships
• Build and maintain an effective and efficient relationship with front and middle
offices
• Learn operational regulatory risk requirements and measurement under Basel II
Official Regional Recruitment Partner

Dear Operations Manager,
As our market moves forward at lightening speed, the untrained
eye sees constantly evolving products and services with complex,
innovative approaches unprecedented in the region.
What they don’t see are the back office operations that go along
with these new offerings. These operations grow with even more
complexity than the new product or service on offer, including the
management of abstract variables such as risk monitoring and
regulatory pressure.
For these reasons, the demand for IIR’s Back Office Management
and Operations has been, and will continue to be, incredibly high.
This interactive five-day course will help you to develop a
management style that helps to continuously improve quality
throughout the back office while at the same time establishing
efficient processes and delivering cost-effective services.
By attending this course, you will be able to;
• Implement best practice operational risk management
• Efficiently manage back office staff, transaction volumes, new
products and third party suppliers
• Measure productivity and improve control and monitoring
functions
• Use back office operations to improve the performance of the
treasury function and the internal funds transfer pricing system
• Build and maintain effective relationships with front and middle
offices
Don’t miss this opportunity to take yourself and your team to the
next level of professional Back Office Management and Operations!
John and I look forward to meeting you in February.
Kind regards,
Keith Parker
Conference Manager
P.S. Take advantage of Early Bird Discount
to save US$ 500 if you book by
6 December 2008!
P.P.S. Dr. John W. Dalle Molle incorporates
various concepts into this course and
has been lauded for his impressive
presentation style!
Tel: 971-4-3352437 Fax: 971-4-3352438 Email: register@iirme.com Web: www.iirme.com/backoffice
About Your Expert Course Leader
Dr. John W. Dalle Molle’s current specialisations are in
the areas of quantitative risk analytics, modelling and
management and quantitative financial modelling.
He has acquired extensive experience in executive
financial training in Asia Pacific, the USA, and various
European countries. His clients include several large
financial institutions and central banks. In addition
to engaging in financial training seminars, Dr. Dalle Molle has made
numerous professional presentations in global conferences and
exhibitions such as Futures And Options World (FOW) in Singapore, the
New Zealand Econometrics Group Meeting, Quantitative Methods in
Finance Conference in Sydney, and EURORISK 2001 Conference in Paris,
France. Dr. Dalle Molle has an interdisciplinary PhD in Management
Science/Information Systems with a focus on financial econometrics,
a Masters of Mathematics (with thesis) and a Masters of Science in
Petroleum Engineering all from the University of Texas at Austin, and
a Bachelor of Science in Chemical Engineering from the University of
Iowa. Dr. Dalle Molle is in the process of completing the following two
volume book for John Wiley and Sons entitled: Enterprise-wide Risk
Management: Volume I – The Essentials of Risk Assessment,
Measurement, and Management at the Individual, Portfolio, and
Firmwide Levels and Volume II – A Detailed Classification of Risk
Categories, published this year.
“Well organised programme, effective
learning tools and effective speaker”
Sulayman Harith, Senior Back Officer
Nigeria LNG Ltd., Nigeria
Forthcoming Relevant Events
BC2888 Essentials Of Business Process Analysis, Mapping And
Modelling
15 – 19 February 2009 www.iirme.com/bpamm
BC2896 Management Skills For Middle Managers
22 – 26 February 2009 www.iirme.com/msmm
BC2945 Certificate in Administrative Management
22 – 25 February 2009 www.iirme.com/adminmgnt2
For more information on any of the above events please contact us on
Tel: 971-4-3352483 or email: info@iirme.com
Back Office Management And Operations 15 – 19 February 2009

Course Timings
Registration will be at 8.00 on Day One. All five days will run from 8.30 to 14.30 with two breaks for coffee and refreshments at appropriate intervals. Lunch will be
served at the end of each day.

Course Description
The course is focused on managing back office operations with treasury, trading books and internal funds transfer pricing used as examples.
The procedures and principles discussed may be applied to all types of back offices in banks and financial institutions. The emphasis is on a proactive management
style to continuously improve quality throughout back offices while at the same time, establishing efficient processes and delivering cost-effective services. The
operational risk and operations management procedures are discussed in detail and from the perspectives of the treasury function, ALM function and the trading
functions.
The major back office services are covered in detail, problem areas are highlighted and procedures outlined to minimise errors and disruptions in order to facilitate
smooth processing and business continuity.

Training Aids
Throughout the course, you will use Excel-based models and be presented with case studies directly related to the material. Numerous real examples of loss events and
other adverse manifestations of the different risks will be discussed. Please remember to bring your laptop.

Course Outline

Day One – Sunday, 15 February 2009
Operational Risks And Operations Management
Operational Risk Categories, Factors, Issues And Sources
• Operational risk spectrum – defining operational risks and exposures
• Recent market developments leading to increased exposures to operational
risk
• Operational loss causes, factors, events, effects and consequences
• Decomposing operational risk - expected, unexpected and extreme losses
• Unexpected operational losses due to people, processes and systems risk
. EXCEL Exercise – Generating random occurring operational events
Overview Of Back Office Operational Structures
• Operations and operational risk policies and organisation
• General structure of the back, middle and front offices
• Overview of the functions of the back, middle and front offices
• Activities and information requirements of back, middle and front offices
• Back office and independent risk reporting
v EXHIBIT – 1968 paperwork crisis and Wednesday trading halts on US
exchanges
v EXHIBIT – Tokyo blackout on August 14, 2006 and delayed NIKKEI 225
index updates
Back-Office Operations – Clearing, Custody And Settlement
Processes
• An overview of operations functions and factors
• Fundamental tasks of the core elements of operations functions
• Responsibilities of the derivatives operations function
• An overview of clearing and settlement processes
• The settlement process
- Settlement conventions, cash flows, factors and issues
- Procedures and controls for the settlement process
- Consequences of settlement failure
• The clearing process
- Clearing mechanisms and the role of the clearing house
- Services offered by clearing organisations
- Comparing clearing procedures for securities and derivatives
• An overview of custody and custodial services
• Corporate actions and asset servicing related to custodial services
- An overview of corporate actions
- Announcement, record, pay and dates and deadlines
- Participants involved in the corporate actions
- Summary of various corporate actions
• Managing client services and customer relationships
v EXHIBIT – Bankhaus Herstatt, German Bundesbank and FOREX
settlement risk
v EXHIBIT – Bank of New York computer system failure, threats to CHIPS
payment clearing system and payment systems risk
v EXHIBIT – Default or near-default of clearing-house members
Day Two – Monday, 16 February 2009
Fraud, Outsourcing, Business Line Management, And
Systems And Technology And Operations Controls And
Management
Fraud – Controls, Detection And Prevention
• The nature of fraud
• Defining internal and external fraud risk
• The factors leading towards fraud events
• The fraud triangle – opportunity, pressure and rationalisation
• Defining fraud categories and events
• Fraud detection, investigation and prevention
• Resolution of fraud and legal follow-ups
v EXHIBIT – Criminal prosecutions of financial fraud
v EXHIBIT – Famous Ponzi schemes
Money Laundering
• An overview of money laundering
• The history of money laundering risk
• Stages to implementing money laundering
• Reporting of suspicious activities associated with money laundering
v EXHIBIT – ABN-AMRO, wire transfers and money laundering
v EXHIBIT – Money laundering, Bank of New York and Russian
organised crime
Systems, Technology And Operations Management
• An overview of systems and technology in the operations processes
• Effects of poorly managed operations systems and technology
• Operations management and the relationship with the IT group
• Effects of IT procedures and controls on operations systems
v EXHIBIT – SWIFT electronic funds transfer communication system

Tel: 971-4-3352437 Fax: 971-4-3352438 Email: register@iirme.com Web: www.iirme.com/backoffice

Outsourcing Risks And Business Line Management
• Best practice for business line risk management
• Business continuity management and contingency planning
• Outsourcing risks
- Overview of outsourcing
- Categories of outsourcing risk
- Recent examples of outsourcing
Operational Control And Operations Risks
• Workflow analysis and operations performance assessment
• Short and long-term approaches for controlling operations risk
• General approaches for controlling operations risk
- Novation, netting arrangements and the reduction of operations risk
- Confirmation matching and transactions netting
- Reconciliation of cash, bank, nostro and vostro accounts
- Margin and collateral management and risk reduction
• Effects of operations on operational risks
• Monitoring operations controls and limits
v EXHIBIT – Martha Stewart, ImClone Systems and insider trading
v EXHIBIT – April 1992, flooding of the Chicago financial district
Day Three – Tuesday, 17 February 2009
Treasury Management, Funds Transfer Pricing Systems
And Trading Book Management From The Back Office
Perspective
Managing The Treasury Function
• Functions of the treasury
• Treasury risk spectrum
• Centralising the treasury functions
• Payment systems and their effect on the treasury function
• Cash management
- Cash management, operating cycles and cash flow timelines
- Cash aggregation, receipts and disbursements
- Managing cash inflows – collection activities
- Managing cash outflows – concentration and distribution systems
• Liquidity management
- Defining liquidity and liquidity risk
- External and internal sources of funds
- Cash budgeting and liquidity management tools
- Managing cash shortfalls
• Interest rate management
- Interest rate exposure reduction
- Asset-liability management and gap analysis
- Hedging using interest rate derivatives and structured products
• Credit risk management
- Current, potential, notional and aggregate credit exposures
- Counterparty credit quality assessment, spreads, ratings, and scoring
- Traditional credit risk mitigation: collateral, limits, and netting
- Hedging using credit derivatives and structured products
• Foreign exchange management
- Foreign exchange settlement
- Internal cash management and currency netting
- Exchange rate risk – translation, transaction, economic and operational
exposures
- Hedging using currency derivatives and structured products
• Risk management in the treasury
- Risk management practice in the treasury group
- Risk measurement, sensitivity analysis, scenario analysis and stress testing
- Contingency planning and disaster recovery
• Treasury information systems and technologies
Tel: 971-4-3352437 Fax: 971-4-3352438 Email: register@iirme.com Web: www.iirme.com/backoffice
Asset/Liability Management, Internal Funds Transfer Pricing
Systems And Economic Transfer Prices
• An overview of asset/liability management (alm) desk
- Overview of asset/liability management
- Components of an alm programme
- Alm interest rate risk measurement techniques
• Funds transfer pricing (ftp) systems
- Objectives of a funds-transfer pricing system
- Internal pools of funds and funds transfer pricing systems
- Limitations of traditional funds transfer pricing
• Guidelines for setting economic transfer prices (etps)
- Economic transfer pricing, arbitrage opportunities and the maturity
spread
- Pricing schemes and economic transfer prices for lending activities
- Transfer prices and cost of funds and resources for lending activities
• Matched funds transfer pricing and capital allocation
Managing A Trading Book From The Perspective Back Office
• Introduction to trade processing – the anatomy of a deal
• Organisation and operations of a brokerage and trading firm
• Underwriting – the birth of a security
• Over-the counter versus exchange traded markets
• Operations structure in the trading room
• Order room and trade execution
- Basic order information, order types and order processing
- Trade execution and capture
- Trade reconciliation and recording
• Purchase and sales (P&S)
- Confirmation, recording and booking
- Figuration including accrued interest
- Comparison and reconciliation
• Cashiering
- Receiving, delivering, and vaulting of securities
- Security loans/borrowing and transferring
- Hypothecation of security for margin accounts
• Stock record accounting
• Margin account management
- Initial, maintenance and variational margins account
- Margin account maintenance - margin calls and close outs
• Brokerage accounting
- Establishing accounts and dual-entry bookkeeping
- Daily cash reports and profit and loss statement
- Bank-brokerage relationship
• Clearing and settlement
- Functions of clearing organisations and settlement systems
- Clearing and settlement for bonds, equities, and derivatives
• Custody services
v EXHIBIT – Trading Process (Short) Case Studies
u Salomon Brothers and manipulation and illegal trading in the US
treasury markets
u London Stock Exchange, Big Bang, and cancellation of the TARUS
trading system
u Nic Leeson, Barings Bank, inappropriate control of front and back
operations
u Toshihide Iguchi, Daiwa Bank and 30,000 unauthorised treasury market
trades
u Yasuo Hamanaka, Sumitomo Corporation, failure to segregate back and
front office, and 10 years of unauthorised copper trades
u National Australia Bank (NAB) and unauthorised foreign currency trades
v EXHIBIT – Margining Systems – SPAN and TIMS
. EXCEL – Calculating margins using the SPAN margining systems
Day Four – Wednesday, 18 February 2009
Operational Loss Databases, Operational Risk
Assessment, Identification, Measurement, Comparing
Credit, Market And Operational Risk And Enterprise
Risk Management
Operational Event And Loss Databases
• Information sources for operational events, losses and indicators
• Elements, responsibilities and benefits of an operational event collection
policy
• Setting capture thresholds for operational loss event collection
• Managing, control and monitoring operational event databases
v EXHIBIT – Mizuho Securities, erroneous trades and the “Fat Finger
Syndrome”
Operational Risk Assessment, Identification, Measurement
• Overview of operational risk assessment, identification and measurement
• Top-down and bottom-up approaches to operational risk assessment and
measurement
• Defining and identifying the key operational risk factors, indicators, drivers
and escalation triggers
• Operational risk profiling and factor selection for operational risk
identification
• Qualitative operational assessment techniques including risk maps, risk
scorecards, workflow charts and tracking charts
• General quantitative techniques for measuring and modelling operational
loss severities, event frequencies and event durations
• Operational risk loss event classification - risk sources and related risk
indicators
Comparing Credit, Market And Operational Risks
• Categories of credit, market and operational risks
• Loss categories for credit, market and operational risks
- Loss categories for credit risk
- Loss categories for market risk
- Loss categories for operational risk
• The relationship between credit, market and operational risks
• Recent examples of credit, market and operational losses
- Recent examples of credit risk losses
- Recent large market losses attributed to rogue traders
- Examples of the recent extreme operational risk losses
• Identification, management and measurement for credit, market and
operational risks
• Loss distribution definitions and assumptions for market, credit and
operational risks
• Defining value-at-risk (var) forecast for market, credit and operational risks
• Data availability for credit, market and operational risk modelling
Enterprise-Wide Aspects Of Operational Risk Management
• Dimensions to the enterprise risk management (ERM) functions process
• Comparing traditional and enterprise risk management functions
• Implementing erm procedures and policies – best practice
• Benefits and limitations of enterprise-wide risk management
• Contributions of operational risk management procedures to ERM
effectiveness
• Implementing a enterprise-wide operational risk management policy
Tel: 971-4-3352437 Fax: 971-4-3352438 Email: register@iirme.com Web: www.iirme.com/backoffice
Day Five – Thursday, 19 February 2009
Operational Risk Measurement, Risk Capital Allocation,
Operational Regulatory Capital Charges And Model
Risk
OPVaR Forecasting, Stress Testing And Scenario Analysis
• Common models for loss severities, loss frequencies and loss event duration
• Mapping correlations between operations and operational risks
• Defining an operational Value-at-Risk (OPVaR) estimate
• OPVaR forecasting with collective and individual risk models
• Modelling operational loss exposures using the historical simulation
VaR model
• Stress testing and scenario analysis for forecasting operational risk
measures
v EXHIBIT – OPVaR forecasting for various frequency and severity
distributions
. EXCEL Example - OPVaR forecasting using historical simulation var
and different categories of random occurring Monte Carlo loss
events
Operational Risk Performance Analysis And Risk Capital
Allocation
• Backtesting operational risk models
• Operational risk audits and reviews
• Operational risk and event reports
Modelling Operational Regulatory Capital Charges Under Basel II
• An overview of operational risk capital charges under Basel II
• Basel II and the three complementary pillars of operational risk
- Pillar 1 – minimum requirements for capital charges
- Pillar 2 – supervisory review process
- Pillar 3 – public disclosure requirements
• Basel II risk measurement and regulatory capital measurement approaches
- Basic indicator approach
- Standardised approach
- Advanced measurement approaches
• An overview of the advanced measurement approaches
- Internal measurement approach
- Loss distribution approach
- Risk scorecard approaches
• Factors for selecting an operational regulatory risk measurement
approach
• Operational Risk and the Quantitative Impact Studies (QIS)
v EXHIBIT – Basic indicator approach, the standardised approach, and
advanced measurement approach for operational regulatory capital
measurement
Model Risk
• Sources of model risk - general types of modelling errors
• Categories of model risk
- Risk of choosing the wrong model
- Risk of incorrectly using a model
- Incorrect model calibration
- Market data processing issues
- Improper model application
• Controlling, monitoring and managing model risk
v EXHIBIT – Recent examples of model risk
 IIR Middle East certified by

Back Office Management And Operations

15 – 19 February 2009 • Villa Rotana Hotel, Dubai, UAE

FIVE EASY WAYS TO REGISTER

971-4-3352437 971-4-3352438 register@iirme.com

IIR Holdings Ltd. GCS/IIR Holdings Ltd.

PO Box 21743, Dubai, UAE P O Box 13977, Muharraq, Kingdom of Bahrain

www.iirme.com/backoffice
For further information and Group Discounts*
contact 971-4-3352483 or email: r.devnani@iirme.com
*Group discounts are only applicable on the full event price
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